Inc. Magazine
Warren Buffett’s latest shareholder letter highlights Berkshire Hathaway’s strong performance despite market challenges. With a cash reserve of $334.2 billion and rising profits, Buffett reassures investors that most funds remain in equities. Over the past 60 years, Berkshire’s market value skyrocketed 5.5 million percent, outpacing the S&P 500 by a wide margin.
Author: Phil Rosen
Sometimes I perk up when I realize I’ve published my newsletter every day for nearly a year, but then I remember Warren Buffett is currently riding a streak of six decades.
With characteristic wit, wisdom and a measured candor, the 94-year-old Berkshire Hathaway chief released his latest shareholder letter on Saturday. In it, he touched on everything from his record cash pile and optimism for US businesses to succession plans and building investment in Japan.
Berkshire ended last year as a net-seller of equities for the ninth consecutive quarter. Its cash reserves ballooned to $334.2 billion, up from $325.2 billion in the third quarter and $167.6 billion the year before. Plus, for the second quarter in a row, Berkshire did not repurchase any of its own stock, which suggests Buffett may believe his own shares are a bit pricey.
Buffett, however, reassured shareholders that he’s bullish long-term on good American businesses.
“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities,” Buffett said. “That preference won’t change.”
“Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities,” he continued, adding that good businesses and talented individuals will “usually find a way to cope with monetary instability.”
Other notable numbers from Berkshire’s report, which encompasses earnings from all of its wholly owned businesses:
- Operating profits rose 71 percent to $14.5 billion
- Full-year operating earnings rose 27 percent to $47.4 billion
- Insurance underwriting surged 302 percent to $3.4 billion
- Insurance investment income jumped 50 percent to $4.1 billion
And Buffett’s take on those numbers:
“In 2024, Berkshire did better than I expected, though 53 percent of our 189 operating businesses reported a decline in earnings. We were aided by a predictable large gain in investment income as Treasury Bill yields improved and we substantially increased our holdings of these highly-liquid short-term securities. Our insurance business also delivered a major increase in earnings, led by the performance of GEICO.”
While the company’s Class A and Class B shares have lagged the S&P 500 over the last 12 months, zooming out tells a better story. Since 1965, Berkshire has returned a compounded annual gain of 19.9 percent to its shareholders, nearly double the S&P 500’s 10.4 percent.
The gap in overall performance is even more stark. Over the last six decades, Berkshire’s market value increased 5,502,284 percent through the end of 2024, while the S&P 500 has gained 39,054 percent.
Credits: TCA, LLC.